Get rid of empty cells while using formula

nicholes,

Attached is an example workbook based on the screenshot provided and criteria described.
In cell D1 is a drop down list containing A and B.
In cell D3 and copied down to D7 is this array formula. Array formulas must be confirmed with Ctrl+Shift+Enter and not just enter:

=IFERROR(INDEX($A$3:$A$13,SMALL(IF($B$3:$B$13=$D$1,ROW(INDIRECT("1:"&COUNTA($A$3:$A$13)))),ROW(1:1))),"")

A simpler alternative solution that provides the same results, is a pivot table, which is shown in column G.